US President Donald Trump has ordered the removal of Federal Reserve Governor Lisa Cook, citing allegations of false statements on her mortgage agreements. In a letter to Cook, Trump stated that he has determined there is sufficient cause to remove her from her position, effective immediately. The decision is based on a criminal referral from the Federal Housing Finance Agency’s director, a Trump ally, to the US attorney general.
The Federal Reserve Act generally limits a president’s ability to remove officials from the central bank, allowing removal only for “cause,” which could be interpreted as wrongdoing. However, Trump pointed to the referral as sufficient reason to believe Cook might have made false statements on one or more mortgage agreements.
Cook, the first Black woman to serve on the central bank’s board, had previously stated that she had no intention of being bullied to step down but would take questions about her financial history seriously. The Fed has not responded to queries on Trump’s announcement.
The move is likely to spark a legal battle, with Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, calling Trump’s action “an authoritarian power grab that blatantly violates the Federal Reserve Act.” Warren added that the decision “must be overturned in court.” Cook may be allowed to remain in her position during the legal challenge.
The development comes as Trump has been increasing pressure on the Fed, criticizing its chief Jerome Powell for not lowering interest rates sooner despite benign inflation data. Fed policymakers have been cautious in cutting rates, monitoring the effects of Trump’s tariffs on prices. Trump has previously expressed disdain for Powell, calling him a “numbskull” and “moron.”
The targeting of Cook, who sits on the Fed’s rate-setting committee, follows Trump’s repeated broadsides against Powell while the central bank kept the benchmark lending rate unchanged. Since its last reduction in December, the Fed has held rates at a range between 4.25% and 4.50% this year. Powell recently opened the door to lowering levels at the bank’s upcoming policy meeting in September.
Cook took office as a Fed governor in May 2022 and was reappointed to the board in September 2023. She has previously served on the Council of Economic Advisers under former President Barack Obama. The Trump administration has pursued allegations of mortgage fraud against high-profile Democrats seen as political adversaries of the president.
The removal of Cook is significant, as it may set a precedent for the president’s ability to influence the independent central bank. The legal battle that is likely to ensue will have implications for the Fed’s autonomy and the president’s power to remove officials. The outcome of the challenge will be closely watched, as it may impact the central bank’s decision-making and its relationship with the administration.
